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A plan to limit the tax-deductibility of interest on municipals would trigger mandatory...

A plan to limit the tax-deductibility of interest on municipals would trigger mandatory redemption provisions on some of the paper, says Citigroup, which estimates up to $150B of the paper may need to be called. If just one investor is forced to pay taxes on what were tax-exempt bonds, says Vikram Rai, mandatory redemptions can be triggered for all owners of the same issue.
Comments (4)
  • youngman442002
    , contributor
    Comments (5131) | Send Message
     
    72,000 pages of tax code...and 720,000 lobbyists
    8 Jan 2013, 12:26 PM Reply Like
  • saratogahawk
    , contributor
    Comments (1587) | Send Message
     
    We knew this possibility was coming. Call one of these bonds for taxation and the muni market will fall apart. Who will pay for sewage treatment and water systems, etc if the muni bonds can't be sold?
    8 Jan 2013, 12:41 PM Reply Like
  • Malcom Genna
    , contributor
    Comment (1) | Send Message
     
    Investors of all types purchased Municipal Bonds with the important condition that interest earned from them would be tax exempt. Changing this condition on bonds already issued would constitute a breach of contract, and obvious legal remedies could be sought. The legalities could be argued in courts for a decade.

     

    It might be possible to change the conditions for new bonds yet to be issued, but this would destroy a key source of funding for States and municipalities.

     

    Even Congress would not be so arbitrary, or so foolish.
    9 Jan 2013, 02:10 AM Reply Like
  • youngman442002
    , contributor
    Comments (5131) | Send Message
     
    Ask the GM bondholders about what the government can do to laws and rights...
    9 Jan 2013, 08:25 AM Reply Like
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